Category Archives: markets

A Foolish Question

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In a piece about British Prime Minister Boris Johnson’s new Brexit architect Dominic Cummings, a question was raised that’s central to the next three months of Great Britain’s future and perhaps to its future’s subsequent years.

The question now is whether he [Cummings] will steer the Johnson government toward swallowing a compromise divorce deal with the EU or prepare it to quit with no deal at all.

This is a foolish question. Not only are they not mutually exclusive, they must be done in parallel—or rather the better question must be done in parallel with the no-deal: steering the matter toward a better compromise from the EU.

The no-deal departure, fully set up, is the only lever the Brits have against a mendacious Brussels.

Finally

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Great Britain, early in this latest stage, might finally have a Prime Minister who’s serious about Brexit because he’s committed to it in his soul, unlike the Remainer Theresa May (whom I think made a good faith effort, but because her heart wasn’t in it, she couldn’t perform).

British Prime Minister Boris Johnson laid out a hard-line negotiating stance with the European Union, setting the stage for fraught Brexit talks before the UK’s scheduled departure from the bloc on Oct 31.

Among other things,

In a combative first speech to Parliament, Mr Johnson reiterated Thursday that the plan in place to avoid a border on the island of Ireland after Brexit—one of the central planks of the divorce deal—was “unacceptable” and would have to be abolished.

Of course it’s unacceptable, and it should have been all along—it is nothing but Brussels’ attempt to disassemble Great Britain in punishment for its effrontery in deciding to leave the EU and as a warning to other uppity member nations.

Which is sort of what Johnson said:

No country that values its independence and indeed its self-respect could agree to a treaty, which signed away our economic independence and self-government as this backstop does[.]
I do not accept the argument that says that these issues can only be solved by all or part of the UK remaining in the customs union or in the single market

Nor does this poor, dumb colonial from Texas accept such sewage.

One More Reason

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…to be clear and overt in our support for the Republic of China.

We sailed a guided missile cruiser through the international waters of the Taiwan Strait last Wednesday, and the People’s Republic of China objected.  Then it threatened.

China said it would take all necessary military measures to defeat “separatists” in Taiwan.

This comes, also, after the PRC threatened military action against the people of Hong Kong because they’ve been uppity enough to insist that the PRC honor its commitment to Hong Kong’s (semi-)autonomy IAW its handover agreement with Great Britain.

All this adds to the necessity of selling the RoC anti-missile and anti-aircraft systems, modern combat aircraft and ground combat equipment, and brokering deals between the RoC and Israel for the latter’s Iron Dome and Arrow systems.  And systems designed specifically to defeat amphibious and airborne invasion attempts.

We’re already in the processing of selling them $2.2 billion worth of arms, but that should be only a start.

Sanctions on Turkey?

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That’s the question being asked regarding Turkey’s decision to buy—and subsequently to take delivery on—Russia’s AS-400 anti-aircraft missile system and the impact that has, or should have, on our alliance with Turkey.

The question, though, assumes we have an alliance. Formally, one exists, but it’s in name only outside of NATO (and with Turkey cozying up to Russia, that one is in flux, too); Turkey has chosen functionally to walk away from any bilateral arrangement.

I think, though, the decision to cancel Turkey’s F-35 buy is sufficient. We don’t need to apply sanctions; we don’t need to have much of anything to do with Turkey, good or bad, outside our NATO obligations.

Turkey just isn’t that important to us.  It’s a convenient path into the Middle East, but even that is questionable.  Turkey, after all, refused to let us operate from there during the second invasion of Iraq, in contrast with Saudi Arabia’s and Kuwait’s active support.  That refusal complicated military matters and led to a longer fight than necessary, with higher casualties all around.

Much Ado

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…is being made about the People’s Republic of China’s slowing economic growth rate.

The Chinese economy has suffered a loss of momentum in the second quarter, with the GDP falling to 6.2% from a 6.4% expansion in the first three months of the year, figures released by the National Bureau of Statistics showed on Monday.

This is the slowest growth rate in 27 years, goes the alarm.  That’s supposed to apply pressure to the PRC to start negotiating seriously with the US on trade.  In truth, it does add some pressure, but it’s necessary to keep in mind a couple of other things, too.

One is that slowing growth is, still, growth, and a 6.2% growth rate still is one of the highest economic growth rates in the world, albeit that rate comes against one of the lowest baselines in the world.

Another is that the PRC’s government, led by President Xi Jinping and his Communist Party of China henchmen, is willing to inflict more pain and economic (read: standard of living) damage on its people than are most Western governments on theirs.

The tariff pressure being applied to the PRC is both necessary and having serious effects. Producers are moving their sourcing from the PRC and shifting it to other nations around the Pacific, some to the US, others to Vietnam, Philippines, Japan, Indonesia, Malaysia, and so on.  And that slowdown in growth rate is real and a continuing trend.

It’s just that the struggle to get the PRC to deal honestly with the rest of us in trade, intellectual property, and technology will not be over quickly, nor will any of us enjoy it.  But we must stay the course.